Hi Bigalo,
First of all, I'm not a big javascript guy so this won't be the complete answer, but it should get you started.
I can easily do what you want in PHP with the str_replace function -- bascially swap out each instance of a set string with another.
Now, there is a similar method in JavaScript -- the replace() method
Code:
stringObject.replace(findstring,newstring)
Now, you could use that for your string replacement. Then you would use the DOM to write the results of this method back into your textbox/area.
I also imagine you'll need some sort of triggering this method through a key down function or something of the sort.
Sorry that I can't be of much help but I saw no one had chimed in yet so I thought I'd get you started. Maybe try to get something going with my info above and then post in the javascript forum for some additional help (once you have something to show).
HTH
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